New Zealand: GDP expands at solid pace in Q4; services sustain growth
March 19, 2015
In the fourth quarter of 2014, GDP increased a seasonally-adjusted 0.8% over the previous quarter, which marked a slight deceleration over the 0.9% expansion observed in Q3. The print exceeded market expectations of a milder 0.7% expansion. Compared to the same quarter of the previous year, GDP increased 3.5% in Q4 (Q3: +3.2% year-on-year). In the full year 2014, GDP expanded 3.3%, coming in above 2013’s 2.3%, and marking the largest gain in seven years.
Q4’s quarterly expansion was mainly driven by the services sector and, to a lesser extent, by manufacturing. Goods producing industries slowed from Q3’s 0.6% expansion to a 0.3% rise in Q4. The manufacturing industries expanded 1.0% in Q4 (Q3: +1.9% quarter-on-quarter) and construction activities rebounded from Q3’s 1.4% contraction to a 0.3% increase in Q4. Conversely, electricity, gas and water swung to a 2.5% contraction (Q3: +0.5% qoq). Growth in services sped up from 0.3% in Q3 to 0.9% in Q4. All of the five sub-sectors of the services category expanded at a faster pace compared to Q3. Retail trade and accommodation recorded the largest expansion among these sub-sectors, growing at the fastest pace since Q3 2011, followed by public administration as well as financial and insurance services.
On an expenditure basis, GDP grew 1.1% over the previous period in Q4, matching Q3’s print. The print reflected that an improved performance of the external sector offset slower investment and consumption growth. Total consumption grew 0.6% over the previous quarter, which was down from Q3’s 1.2%. While private consumption growth decelerated from Q3’s 1.4% to 0.6% in Q4, government consumption inched up from Q3’s 0.4% expansion to a 0.6% rise in Q4. Fixed investment slowed notably to a mild 0.3% growth in Q4 (Q3: +3.0% qoq). The external sector improved as exports rebounded from a 0.1% contraction to 6.1% growth in Q4. Imports grew 3.0% (Q3: +0.3% qoq). Consequently, the external sector’s net contribution to overall economic growth turned around from minus 0.1 percentage points in Q3 to plus 0.7 percentage points in Q4.